CANBERRA: Australia’s competition watchdog has allowed the consortiums IFM and QIC to participate in bidding for a 50-year lease at the Port of Melbourne, Australia’s biggest container terminal and general cargo port. The decision follows Australian Competition and Consumer Commission Chairman Rod Sims’ attack on port privatizations in the country and the price increases they generate for users, a position shared by the industry lobby Shipping Australia Limited. Sims made headlines in July after condemning a port privatization spree and a single-minded focus from policy makers on “best price.”
Sims had said he was“almost at the point of opposing privatization” because successive governments structured sales to favor revenue and not competition, which motivated new owners to increase rates to make back their investment. “I see it getting worse,” he told the Melbourne Economic Forum. “That’s why I am saying just let’s stop privatizations — it’s increasing prices, let’s just call it out. I believe it is damaging the economy.”
However, Sims in a release following a 10-week review of the consortiums, cited the Victorian State government’s price regulation terms for the Melbourne lease, which cap fees and prices for port users for the first 15 years of the lease. Both consortiums competing for the port lease have interests in New South Wales’ ports and the Port of Brisbane as well as relations with DP World and other service providers operating in Melbourne.
Key to the ACCC’s blessing was “the physical distance between ports and high domestic transport costs, which means most port users don’t have a choice but to use their closest port”. “The ACCC conducted extensive inquiries with a large number of port users and stakeholders at various levels of the supply chain,” Sims said. “The ACCC has formed the view that neither acquisition would result in a substantial lessening of competition.”
The Port of Melbourne handles 2.6 million containers and receives 3,000 ships each year. It is expected to sell for roughly $4.5 billion.Sims is not the first to cast doubt on privatization at Australian ports. Shipping Australia CEO Rod Nairn in September said Australian ports had become uncompetitive in the region. Calls at Australian ports average $40,000, double those at the leading New Zealand ports of Auckland and Tauranga, and quadruple what Singapore charges. Nairn pointed out that navigation charges at Newcastle increased 60 percent in the months following that port’s privatization.
